| Wed 27 Mar 2002, 0:00 | | Primedia Limited - Interim Unaudited Results |
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PRIMEDIA LIMITED
Incorporated in the Republic of South Africa
Registration number 1993/003355/06
Share code: PMA ISIN: ZAE000035119
Share code: PMN ISIN: ZAE000035127
("Primedia")
Interim Unaudited Results for the six months ended 31 December 2001
1. Overview
Primedia's results for the six months reflect the advancement of a number of
its objectives that support its long-term strategy. The results for this
period are however overshadowed by exceptional items that the group has
charged to the income statement in connection with Ster Century Europe (SCE)
and Ster Century Middle East (SCME).
Primedia has implemented a thorough review of SCE since securing joint
management control in October 2001. In addition, SCE has impaired its fixed
assets by $19 million and accordingly, Primedia has provided for its
attributable share of $7,7 million (R71,6 million). Consistent with this
prudent view, the group has written off all of its outstanding residual
goodwill amounting to R74,0 million. A similar approach has been taken on
SCME, for which an exceptional provision of R65,9 million has been made in
respect of certain contingent liabilities relating to SCME's bank
borrowings. These exceptional items have been recognised and fully provided
for in these financial statements.
These non-cash exceptional items overshadow the credible performance posted
by Primedia's South African operations, especially the filmed entertainment
businesses, which recorded a 30% growth in EBITDA year-on-year. Cash flow
generation by the group during the period was considerably better than last
year, reflecting a 124% conversion ratio relative to operating profits
before interest and tax. In addition, net interest expense declined by 49%.
The group has a conservative gearing ratio of 30% and EBITDA for the six
months covered net interest by thirteen times.
For the last two years the group's foremost objective has been the
rebalancing of its media portfolio, which has been overweight in cinema
exhibition. The Board of Primedia (the Board) is of the opinion that a more
appropriately balanced media portfolio, with its focus predominantly in
South Africa, will provide the backbone for a more sustainable and
predictable earnings and cash flow profile.
As a consequence of the successful sale of the Central European territories
by SCE and after taking into account current market conditions and other
factors considered important in unlocking and growing shareholder value, the
Board has withdrawn its recommendation to split the group into two listed
companies. Primedia will continue to pursue its main objective of re-
balancing its media portfolio by considering alternatives that will maximise
shareholder value from its international cinema interests.
In pursuit of Primedia's strategy of strengthening its leading position in
the local market place, the Board intends to continue to build on the
success of its proven black empowerment model.
With the simplification of the group's capital structure following the
conversion of the debentures into share capital and the reduction in
contingent liabilities resulting from the sale of certain SCE territories,
the group is in a stronger financial position to deliver on its strategy.
2. Review of operating results
2.1 Advertising
The group's portfolio of advertising businesses (excluding iafrica.com)
produced solid operating results in an exceptionally difficult trading
environment. EBITDA of R80,9 million was slightly lower than last year.
Healthy EBITDA margins of 28% were maintained, notwithstanding a 3% decline
in turnover. Expenses were well controlled and were reduced year-on-year.
The Broadcasting division continues to generate superior performance and of
note is the significant improvement in profitability of 702 Talk Radio and
the achievement of profitability by 567 Cape Talk Radio for the entire
second quarter. Other improved performances were from companies in the
Specialist Marketing division, which delivered a 20% year-on-year
improvement. Although small in Primedia's portfolio, Primedia Publishing
turned in another improved performance.
The declines experienced by the other businesses are ascribed mainly to
pressure on gross profit margins as the companies experienced intense
competition and pricing pressures during the period. Following the de-
listing of Metropolis on 25 October 2001, iafrica.com has become a 71,4%
held subsidiary of Primedia.
The Board welcomes the review of the broadcasting legislation by the
Independent Communications Authority of South Africa (ICASA) and intends to
contribute fully to the process, in particular around existing ownership
limitations and the further privatisation of the SABC.
2.2. Filmed entertainment - South African operations
Ster-Kinekor Theatres (SKT) continued to deliver an improvement relative to
all of its key performance indicators including labour costs, variable
rentals, concession spend per attendee, concession margins and average
ticket prices. This, combined with a welcomed increase in admissions by 8%
year-on-year to R8,0 million, resulted in a 39% improvement in SKT's EBITDA
to R25,3 million.
Ster-Kinekor Home Entertainment once again produced excellent results with
EBITDA up by 48% to R10,7 million. The consistent growth in this business,
which has been fuelled by good video releases and the surge in sales from
Sony PlayStation II, has resulted in it becoming a material part of the
group's filmed entertainment portfolio.
2.3 Ster Century Europe
At the end of December 2001, 19 sites (210 screens) were trading in eight
territories. At 31 December 2000, SCE operated 13 sites (142 screens) in
seven territories. Four contracted sites remain to open in the UK and
Greece. In terms of the refinancing package concluded in October 2001,
additional capital of $50 million was injected by both Primedia ($10
million) and new and existing shareholders ($40 million), by way of
mezzanine notes and as a consequence, SCE's business plan is now fully
funded. Based on conservative projections it is not envisaged that Primedia
will be required to provide any additional funding into the business going
forward, although it may suffer a dilution of its current 40,6% equity
shareholding to 37,5% if existing stand-by facilities from other
shareholders are called upon.
SCE's turnover grew by 83% to $32,6 million, driven by a 73% increase in
attendances to 6,4 million (2000: 3,7 million) due mainly to new site
openings. Before accounting for central and regional overhead costs, cinema
EBITDA was up 122% to $2,0 million (2000: $0,9 million). Excellent results
were achieved from Liffey Valley (Ireland), Macedonia (Greece) and Korona
(Poland). A sharp turnaround was also achieved at Castle Mall (Norwich, UK)
following operational initiatives. Trading results were, however, dragged
down by start-up losses from new site openings in the UK which accounted for
the bulk of the impairment charge. The results for SCE are summarised below:
Ster Century Europe
Results for the six months 2001 2000
to December $'m $'m
Cinema EBITDA 2,0 0,9
Net non-recurring income (a) 0,5 -
Central and regional costs (3,4) (3,5)
EBITDA (0,9) (2,6)
Depreciation (3,2) (2,9)
Interest (b) (2,4) (0,2)
Tax (0,3) (0,2)
Net loss (6,8) (3,5)
Notes:
(a) Includes $1,4 million settlement claim received for loss of trading due
to a delayed site opening, pre-opening expenses ($0,7 million) and
retrenchment costs ($0,3 million).
(b) Includes $0,9 million of interest on the $50 million mezzanine notes,
part of which is payable to Primedia.
Primedia's equity accounted share of SCE's losses for the period amounted to
R28,1 million (2000: loss of R12,9 million). Relative to last year, the
declining exchange rate had a R3,5 million negative impact. Furthermore, the
widened losses also reflect Primedia's increased ownership from 30% at 31
December 2000 to 50% prior to the refinancing in October 2001, and 40,6%
thereafter. This amounted to R9,2 million of the increase.
In October 2001, Primedia secured joint management control over SCE for the
first time. Further to this, Primedia has appointed the Chairman of SCE's
executive committee and best operating practices from SKT are being migrated
to SCE. In addition, concerted efforts are being made to reduce onerous
rentals as well as central and regional overhead structures. The benefits of
these are, however, only likely to manifest themselves in the medium term.
2.4 Ster Century Middle East
SCME currently has four sites trading in Abu Dhabi (one site opened in April
2001), Sharjah (two sites opened in December 2001 and February 2002) and
Jordan (one site opened in December 2001). A further two sites are due to
open in Dubai in mid 2002. No further sites are planned.
Primedia's (50%) share of SCME's losses in the six month period to December
amounted to R8,4 million reflecting disappointing trading. Further to
Primedia securing joint management control of SCME in October 2001, a review
of the business is now underway and a profit improvement programme is also
being pursued vigorously. The results for SCME are summarised below:
Ster Century Middle East
Results for the six months 2001 2000
to December $'m $'m
Cinema EBITDA (0,5) -
Other income 0,5 -
Depreciation (0,2) -
Central and regional costs (1,2) (1,0)
Interest (0,4) -
Net loss (1,8) (1,0)
Based on these results and conservative cash flow projections regarding
future performance and new site openings, Primedia has made the R65,9
million provision in respect of its 50% share of SCME's bank facilities. The
Board is of the opinion that this provision is conservative especially
taking into account the prospects for rental renegotiation and the inherent
value of a number of sites.
2.5 Primecom
Primecom's results reflect the very difficult market conditions that have
prevailed particularly in the Internet sector. Consequently, the digital
communications business produced results well below last year, which
coincided with the peak in worldwide spending on Internet and technology.
In order to remain cash flow positive in this contracting market, Wheel and
Foresight have been further rationalised, with cost savings being achieved
across IT, facilities and finance. This follows the significant downsizing
of operations that took place in the second half of the 2001 financial year
and which resulted in more than 50% of the workforce being retrenched.
Nevertheless, Wheel/Foresight is the UK's second largest digital design
company.
The balance of Primecom's businesses produced mixed results with Spark (non-
digital communications) posting lower results due to a shift by clients into
the lower margin telephony business and a once-off termination fee of 0,5
million received in the prior year. The Database Group (database marketing),
however, contributed better results mainly as a result of improved gross
profit margins and the declining exchange rate.
Included in last year's figures are the results of businesses disposed of in
2001, being Virtutel, Mailcom and Alpha Mail.
Central costs increased mainly due to the depreciation of the Rand. However,
with effect from 1 February 2002 the central cost function has largely been
dissolved.
3. FINANCIAL RESULTS
3.1 Income statement
Group turnover declined by 5% to R850,7 million and EBITDA decreased by 15%.
These declines were largely attributable to Primecom, which suffered a 39%
decline in turnover and an 83% decline in EBITDA. Adjusting for Primecom's
results, the group's South African operations delivered 11% growth in EBITDA
year-on-year.
The depreciation charge declined by 10% due to the group's improved
allocation of capital.
A R32,6 million foreign exchange gain was recognised on translation of the
$10 million SCE mezzanine note, which is being serviced by interest.
Cash flow generated from operations and proceeds received from the sale of
non-core assets impacted positively on interest charges, which fell by 49%
to R8,8 million relative to the half year 2000.
The share of losses from associated companies mainly represent the results
of SCE and SCME. Kaizer Chiefs made a first time positive contribution.
The total exceptional and non-recurring items amount to R311,8 million. The
bulk of the charge can be attributed to over optimistic targets set for
certain SCE sites, some of which have taken three years to open and have
under-performed relative to original targets. The items are better analysed
as follows:
R'm
SCE
- Goodwill write-off (a) 74,0
- Fixed asset impairment charge 71,6
- Loss on sale of cinema sites to UCI 13,1
158,7
SCME
- Provision in respect of contingent liabilities 65,9
Metropolis
- Goodwill and investment write-off 34,4
Other assets
- Investment write off 49,0
Retrenchment costs 3,8
311,8
Notes:
(a) R40,3 million relates to the accounting loss that arose on dilution of
Primedia's shareholding following the refinancing of SCE in October 2001.
3.2 Balance sheet
Despite the negative impact of write downs, Primedia's balance sheet remains
solid, with total shareholders' funds of R554,8 million (30 June 2001:
R740,2 million). Furthermore, the Group's balance sheet has been
strengthened by the conversion of debentures to equity. The financial risk
relating to SCE has also largely been ring-fenced.
Net debt declined to R167,2 million, notwithstanding the $10 million capital
investment in SCE during the period.
Other long-term liabilities are comprised of:
A developer's inducement of R20 million which is repayable per
attendance over 10 years.
The contingent liability of R65,9 million raised in respect of SCME.
Associated companies represent the group's written down value's of SCE and
SCME. The investment in SCE is made up as follows:
R'm
Equity 54,8
Mezzanine notes* 120,0
Total 174,8
* includes foreign exchange gain of R32,6 million
Based on projections and offers that have been received for certain sites,
the residual value attributed to Primedia's investment in SCE is considered
more realistic.
3.3 Cash flow statement
Free cash flow for the six months was significantly ahead of last year's
result due to effective management of working capital and capital
expenditure. Loans made to associate companies include R87,4 million ($10
million) invested in SCE by way of interest bearing mezzanine notes.
4. PROSPECTS
4.1 Advertising
Due to economic conditions, advertising revenue and consequently
profitability is expected to continue to remain under pressure. However, the
group's portfolio of advertising businesses should enable Primedia to better
withstand these conditions. In addition, growth through innovation and
selected strategic acquisitions, particularly radio broadcasting, will be
pursued. The group's strong black empowerment credentials should also assist
the group in securing more government and parastatal business.
4.2 Filmed entertainment
South Africa
Full year results should be materially ahead of last year following the good
performance in the first half by SKT and SKHE, and on-going efficiency gains
at SKT.
SCE and SCME
In the absence of any material improvement in trading conditions and
discounting any benefits from current initiatives, the trading results for
SCE and SCME should, in the second half, mirror those achieved in the first
half. The Board will continue to look for ways to maximise shareholder value
from the remaining assets and will continue to critically evaluate the
specific performance of individual sites.
4.3 One-to-one
Trading conditions are expected to remain difficult across all sectors and
EBITDA for the full year will be materially lower than last year. However,
Primecom's contribution to HEPU will increase because of prior year
restructuring charges of R32 million, which were expensed in the second six
months of last year.
4.4 Cash flow
The Group will continue to generate quality cash flow.
4.5 Strategy
Over the last two years the group has pursued a range of objectives intended
to contain and reverse the negative performance of its entertainment
businesses, in particular cinema exhibition. In addition the group has
focused on exiting non-core assets and improving the quality of its earnings
particularly those of SKT. The group has also focussed on strengthening its
management. Most objectives have been achieved or are in the process of
completion.
Going forward, the group has two major objectives. Firstly, to complete the
re-balancing of its media portfolio. Secondly, to accelerate the allocation
of capital and dedicate management focus into those businesses where the
group has a high level competency and a real competitive advantage. The
group remains confident of achieving these objectives.
5. CORPORATE GOVERNANCE
In line with the expected recommendations from King II Report, a non-
executive Chairman now heads up the Board of Primedia and fifty percent of
the directors are now non-executive. The Board intends to make further
independent non-executive appointments in due course.
6. CHANGE IN ACCOUNTING POLICY
The interim results have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice. There have been no
changes effected to accounting policies during the six month period other
than stated below:
6.1 Employee benefits
In accordance with the South African Statement of Generally Accepted
Accounting Practice AC 116 revised (Employee benefits) the group has changed
its accounting policy for leave pay and post retirement medical liabilities.
Accordingly, with effect from 1 July 2001, the leave pay and post retirement
medical liabilities have been provided for.
Where necessary, comparative figures have been restated to conform with the
change in the accounting policies.
R'000 Gross Tax Net
Reduction in half year earnings 2001 (1,346) 404 (942)
due to leave pay and post
retirement medical liability 2000 (1,346) 404 (942)
Restatement of opening 2001 (30,428) 9,128 (21,300)
retained earnings at 1 July
in respect of prior year
adjustment 2000 (27,993) 8,398 (19,595)
On behalf of the board
AP Nkuna* W Kirsh
Chairman CEO
28 March 2002
Other Directors: I Kirsh, J A Treger* (Alt. B A Myerson*), M A Barnes*,
K Pillay, P S Ratlou* (Alt. C O Elk*), B J T Shongwe*,
C S Seabrooke*, F A Gazendam, P Maw, O Ighodaro.
Company Secretary: O Ighodaro
(*non-executive director)
CONSOLIDATED INCOME STATEMENT
Unaudited six months Year ended
ended 31 December % 30 June
2001 2000 Change 2001
R'000 Restated Restated
Revenue 850,681 892,718 -5 1,745,043
Operating profit before 116,429 136,437 -15 242,412
depreciation (EBITDA)
EBITDA Margin 14% 15% 14%
Depreciation (37,250) (41,173) (84,540)
Operating profit (PBIT) 79,179 95,264 -17 157,872
PBIT Margin 9% 11% 9%
Foreign exchange gain 32,640 - -
Net interest paid (8,801) (17,187) (15,968)
Profit before debenture 103,018 78,077 32 141,904
interest
Debenture interest paid (36,665) (35,443) (69,661)
Profit before associated 66,353 42,634 72,243
companies
Share of associated (36,686) (20,751) (67,453)
companies' losses
Profit before amortisation
of
goodwill, exceptional and 29,667 21,883 4,790
non-recurring items
Amortisation of goodwill (3,795) (1,128) (10,723)
Exceptional and non- (311,830) 136,197 (31,682)
recurring items
(Loss) / profit before (285,958) 156,952 (37,615)
taxation
Taxation (18,420) (13,596) (10,922)
(Loss) / profit after (304,378) 143,356 (48,537)
taxation
Attributable to outside 117 (6,642) 5,240
shareholders
Accumulated (loss) / income (304,261) 136,714 (43,297)
for the year
Number of units ('000)
- issued 211,599 201,691 204,734
- weighted average 206,504 201,691 201,918
- diluted weighted average 206,756 204,291 204,207
Basic headline earnings per
share / combined unit 21 17 8
(cents)
Basic headline earnings per
share / combined unit before
the effects of
foreign exchange gain 10 17 8
(cents)
Diluted headline earnings per share /
combined unit (cents) 21 17 8
Basic (loss) / earnings per
share / combined unit (148) 7 (139)
(cents)
Diluted basic (loss) /
earnings per
share / combined unit (148) 7 (138)
(cents)
CONSOLIDATED BALANCE SHEET
Unaudited 31 December 30 June
2001 2000 2001
Restated Restated
R'000
ASSETS
Property, plant and 291,770 398,690 278,993
equipment
Goodwill 24,995 4,140 18,114
Associated companies 183,905 414,938 236,923
Other investments 20,457 53,200 57,652
Deferred taxation asset 360,076 327,276 354,652
Current assets 568,026 559,049 459,140
Inventory 53,151 27,743 38,747
Accounts receivable 449,325 471,870 368,522
Cash resources 65,550 59,436 51,871
Total assets 1,449,229 1,757,293 1,405,474
EQUITY AND LIABILITIES
Share capital and reserves 392,947 395,837 232,790
Debentures - 374,639 380,294
Debenture interest to be 32,020 - -
reinvested by unitholders
Total unitholders' funds 424,967 770,476 613,084
Outside shareholders' 129,833 173,145 127,121
interest
Total shareholders' funds 554,800 943,621 740,205
Interest bearing long-term 9,694 58,726 17,367
borrowings
Other long-term liabilities 126,997 26,833 27,915
Current liabilities 757,738 728,113 619,987
Accounts payable 480,006 427,207 387,750
Amounts due to vendors 30,381 31,264 39,634
Debenture interest 5,504 35,443 35,744
payable
Taxation 18,741 33,229 22,825
Interest bearing short- 9,520 10,000 10,883
term borrowings
Bank borrowings and 213,586 190,970 123,151
overdraft
Total equity and liabilities 1,449,229 1,757,293 1,405,474
Net asset value per share / 201 382 299
combined unit - cents
CONSOLIDATED CASH FLOW STATEMENT
Unaudited six months Year ended
ended 31 December 30 June
2001 2000 2001
Restated Restated
R'000
Operating profit before 116,429 136,437 242,412
depreciation
Non cash flow items - - 5,687
Net cash outflow relating to (3,812) (1,928) (43,506)
exceptional items
Increase in working capital (3,588) (53,321) (67,012)
Net interest paid (8,801) (17,187) (15,968)
Taxation paid (14,793) (18,208) (13,079)
Net capital expenditure on
property,
plant and equipment (14,336) (67,591) (63,007)
- to expand operations (27,700) (31,218) (41,723)
- to maintain operations (6,636) (36,373) (21,284)
- funded by landlord 20,000 - -
Cash inflow / (outflow) from 71,099 (21,798) 45,527
operating activities
Debenture interest paid (34,884) (35,165) (69,082)
Acquisitions net of outside
shareholders' interest and
vendor
financing (24,920) (56,176) (243,802)
Net proceeds received on - - 176,343
disposal of businesses
Loans to associated (93,897) (4,697) (3,216)
companies
Other investments (6,467) (11,117) (5,214)
Net funds utilised (89,069) (128,953) (99,444)
Net proceeds from issue of 20,267 (5) 22,430
combined units
Increase in net borrowings (68,802) (128,958) (77,014)
Operating free cash flow 124% 16% 71%
%(1)
(1) Operating profit before
depreciation plus
increase / decrease in
working capital plus / minus
net capital expenditure,
divided by PBIT
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
Share Non- Total
capital distri- Distri- unit-
and butable table holders'
R'000 reserves reserves funds
debentures
Balance at 30 June 2001 401,963 367,095 (134,674) 634,384
Change in accounting (21,300) (21,300)
policies
Provision for post-
retirement
medical aid liability (19,540) (19,540)
Leave pay provision (1,760) (1,760)
Restated balance at 1 July 401,963 367,095 (155,974) 613,084
2001
Units issued 26,488 26,488
Taxation charge on 10,093 10,093
intangibles
Accumulated loss for the (304,261) (304,261)
period
Translation reserve movement 47,543 47,543
Debenture interest to be
reinvested
by unitholders 32,020 32,020
Balance at 31 December 2001 460,471 424,731 (460,235) 424,967
NOTES
Unaudited 31 December 30 June
2001 2000 2001
R'000 Restated Restated
1. Net interest paid
Interest paid (14,012) (21,272) (34,191)
Interest received 5,211 4,085 18,223
(8,801) (17,187) (15,968)
2. Exceptional and non-
recurring items
Assets impaired (71,586) - (70,054)
Net (loss) / profit (127,981) 138,125 106,801
- on disposal of (15,310) 32,126 (70,036)
businesses
- on write-down of
businesses,
investments and loans (114,167) (16,679) (60,747)
- write-back of
intangibles previously
written off against
reserves 1,496 122,678 237,584
Retrenchment costs (3,827) (52) (231)
Restructuring costs - - (33,999)
Provision for closure of
cinema
complexes and onerous - - (32,008)
leases
Restraint of trade payments - (1,876) (1,365)
Cost of acquisitions not - - (826)
completed
Exceptional (loss) / profit (203,394) 136,197 (31,682)
Goodwill write-off (108,436) - -
- on non-core assets (68,120) - -
- on dilution of
Primedia's shareholding
in Ster Century
Europe (40,316) - -
Exceptional and non-
recurring items as
disclosed in income
statement (311,830) 136,197 (31,682)
Taxation 1,085 (248) 15,893
(310,745) 135,949 (15,789)
Attributable to outside - - 8,968
shareholders
Net effect of exceptional
and
non-recurring items (310,745) 135,949 (6,821)
3. Taxation
Current taxation (9,728) (16,991) (7,973)
Secondary taxation on - - (869)
companies
Deferred taxation (8,692) 3,395 (2,008)
(18,420) (13,596) (10,850)
Associated companies - - (72)
(18,420) (13,596) (10,922)
Companies in the group have
trademarks totalling R1 641
million
(2000: R1 691 million),
which are being amortised
for taxation
purposes over defined
periods.
Discussions are in progress
with the South African
Revenue Service relating to
the taxation
treatment of those
trademarks
which have not yet been
approved.
4. Determination of headline
earnings
Attributable (loss) / income
per
the income statement (305,757) 14,036 (280,881)
Intangibles previously
written off
against reserves 1,496 122,678 237,584
Debenture interest 36,665 35,443 69,661
Amortisation of goodwill 3,795 1,128 10,723
(263,801) 173,285 37,087
Headline earnings (1,730) - (4,789)
adjustments:
Loss on disposal of
property, plant
and equipment - - 779
Costs written off against
provision for onerous (1,730) - (5,568)
leases
Exceptional and non- 308,003 (139,049) (9,310)
recurring items:
Assets impaired 71,586 - 70,054
Provision for closure of
cinema complexes and onerous - - 31,508
leases
Net (profit) / loss on
disposal and write-down of
businesses,
investments and loans 127,981 (140,925) (112,237)
Net loss on disposal and
write-down of businesses,
investments
and loans 129,477 (18,247) 125,347
Intangibles previously
written off
against reserves (1,496) (122,678) (237,584)
Restraint of trade payments - 1,876 1,365
Goodwill write-off 108,436 - -
42,472 34,236 22,988
Taxation effect - - (3,770)
Attributable to outside - - (3,191)
shareholders
Headline earnings 42,472 34,236 16,027
5. Associated companies
Listed company - 21,591 22,954
Unlisted companies 183,905 393,347 213,969
183,905 414,938 236,923
Market value of listed
company
at 31 December - 15,114 21,772
Directors' value investments
in unlisted associates at
cost
6. Future lease payments
The minimum lease payments
under
non-cancellable operating
leases
for the holding and
subsidiary
companies are as follows:
Within one year 73,863 59,314 56,517
Thereafter (between 2 and 19 357,263 362,465 342,533
years)
431,126 421,779 399,050
7. Commitments
7.1 Capital expenditure
- contracted 27,229 39,258 18,101
- authorised, but not yet 35,197 59,458 68,370
contracted
62,426 98,716 86,471
7.2 Financial commitments
- minimum guarantee
commitments
to film producers 52,146 31,245 50,758
R26 million of this exposure
is covered by back to back
agreements
with third parties.
8. Lease guarantee
commitments in
respect of associated
companies
Primedia and Royale Resorts
have issued joint and
several guarantees
in respect of future lease
commitments of Ster
Century
Europe and Ster Century
Middle East.
Primedia and Royale have
indemnified each other so as
to limit each
party's exposure to 50% of
the guarantees.
8.1 Ster Century Europe
Primedia's 50% share of the
guarantees issued in respect
of
future lease commitments
amounts to R248 million
(US$20 million) (2000: R200
million (US$26 million)).
Primedia and Royale will be
released from their
guarantee commitments based
on Ster Century Europe
achieving certain financial
milestones, including the
extent of the paid-up
capital of Ster
Century Europe. The
financial milestones in
respect of R53 million of
the guarantee exposure
(2000:
R76 million) have already
been met and, in respect of
these, release of
the guarantee will take
place purely
through the effluxion of
time.
Primedia's 50% share of the
total maximum guarantee
exposure
is as follows:
Total guarantee exposure 248,148 199,315 174,386
Less: Commitments in respect
of which
financial milestones have
already
been achieved (53,190) (76,139) (43,391)
- release within one year (24,168) (57,803) (23,891)
- release between one and (29,022) - -
two years
- release between two and - (18,336) (19,500)
three years
Guarantee exposure in
respect of which financial
milestones have
Still to be achieved 194,958 123,176 130,995
8.2 Ster Century Middle East
Primedia and Royale have
guaranteed
the future rentals in terms
of one lease for Ster
Century Middle
East. Primedia's 50% share
of the guarantee issued in
respect of this lease is 53,244 - 35,776
(US$4 million)
9. Contingent liabilities
Guarantee in respect of 50%
of Ster
Century Europe's bank 65,998 - 116,914
borrowings
Other 8,574 17,317 8,574
74,572 17,317 125,488
Ster Century Europe disposed
of cinema assets in three
territories
for a cash consideration of
US$18,5 million which will
be applied against its
existing bank borrowings
with Standard Bank, thereby
reducing the above guarantee
exposure of Primedia by 50%
thereof. It is anticipated
that the proceeds will
be received in April 2002.
SEGMENTAL ANALYSIS
Six months ended Year ended
Revenue 31 December % 30 June
R'000 2001 2000 Change 2001
Advertising 287,441 295,801 -3 571,064
Broadcasting 86,763 77,891 11 147,989
Outdoor 58,708 56,704 4 115,997
Cinema 25,304 31,725 -20 53,243
Direct Marketing 40,211 48,447 -17 92,580
Specialist Marketing 56,810 59,165 -4 120,406
Publishing 18,861 21,869 -14 40,849
iafrica 784 - 100 -
One-to-one 192,958 316,762 -39 633,710
Digital communications 71,622 122,701 -42 258,759
Non-digital communications 91,957 71,597 28 150,855
Database marketing 29,379 22,604 30 52,555
Companies disposed - 99,860 -100 171,541
480,399 612,563 -22 1,204,774
Filmed entertainment (SA) 368,183 272,106 35 531,667
Ster-Kinekor Theatres 190,157 159,797 19 313,075
Ster-Kinekor Pictures 9,499 9,161 4 17,151
Ster-Kinekor Home 168,527 103,148 63 201,441
Entertainment
Central 2,099 117 nm 480
Primedia Music - 7,932 -100 8,122
Total consolidated 850,681 892,718 -5 1,745,043
N/M - not meaningful
Six months ended Year ended
31 December % 30 June
EBITDA 2001 2000 Change 2001
R'000 Restated Restated
79,280 83,670 -5 156,405
Advertising 45,427 41,157 10 73,952
Broadcasting 16,326 18,502 -12 34,205
Outdoor 5,082 7,652 -34 13,126
Cinema 2,520 7,692 -67 16,567
Direct Marketing 9,937 8,277 20 16,002
Specialist Marketing 1,623 390 316 2,553
Publishing (1,635) - -100 -
iafrica 6,266 37,064 -83 55,140
One-to-one 14 20,150 -100 18,635
Digital communications 4,836 10,135 -52 21,073
Non-digital communications 4,716 2,409 96 7,285
Database marketing - 6,427 -100 19,616
Companies disposed (3,300) (2,057) -60 (11,469)
Central 85,546 120,734 -29 211,545
37,139 28,646 30 56,022
Filmed entertainment (SA) 25,281 18,241 39 39,670
Ster-Kinekor Theatres 1,195 3,218 -63 477
Ster-Kinekor Pictures 10,663 7,187 48 15,875
Ster-Kinekor Home (6,256) (4,492) -39 (18,541)
Entertainment
Central - (8,451) 100 (6,614)
Primedia Music 116,429 136,437 -15 242,412
Total consolidated
N/M - not meaningful
